Money Flow Index (MFI) Indicator

What is the Money Flow Index (MFI)?

The Money Flow Index (MFI) is a volume-weighted momentum oscillator that uses both price and volume to identify overbought/oversold conditions and potential trend reversals. It oscillates between 0 and 100.

MFI Example

How the MFI Indicator Works

Steps:

  1. Calculate Typical Price (TP) = (High + Low + Close) / 3
  2. Compute Raw Money Flow (RMF) = TP × Volume
  3. Classify Positive/Negative Money Flow based on whether TP increased or decreased
  4. Sum positive and negative flows over the selected period
  5. Compute Money Flow Ratio (MFR) = Positive Flow / Negative Flow
  6. Derive MFI = 100 − [100 / (1 + MFR)]

Interpretation:

  • Overbought/Oversold: Above 80 may be overbought; below 20 may be oversold.
  • Divergence: Price making new highs/lows unconfirmed by MFI can signal reversals.
  • Trend Confirmation: Sustained MFI above 50 suggests accumulation; below 50 suggests distribution.

Note: Strong trends can keep MFI in extreme zones longer than expected.

Available Settings in FutPrint

  • Period: Default 14
  • Levels: Overbought 80, Oversold 20 (editable)
  • Price Source: High/Low/Close (used for Typical Price)
  • Style: Line color, thickness, and level colors

Practical Usage and Best Practices

  • Use extremes (80/20) as context, not standalone signals.
  • Combine with price structure (break of swing high/low) to validate signals.
  • Look for divergences at key support/resistance zones.
  • Align with higher-timeframe trend to improve reliability.

Limitations:

  • Volume data quality impacts accuracy.
  • In ranging markets, oscillators can produce frequent signals.

Using MFI in the Platform

  1. Add MFI from the Oscillators list.
  2. Set Period and customize Overbought/Oversold levels as needed.
  3. Combine with RSI or MACD for confirmation.

See Also